Special Report: Saudi Arabia - Industry plan enters key phase

By the early 1970s, the diversification plans were in motion. In 1974, the Saudi Industrial Development Fund was established to offer low-cost loans to companies wanting to set up factories.

A year later, the Royal Commission for Jubail & Yanbu was established to create two huge industrial cities that would feed off the oil industry. The Saudi Industrial Property Authority (Modon) was created seven years ago to expand the light-manufacturing sector.

The latest scheme, the National Industrial Cluster Development Programme, follows the example set in countries such as Indonesia, where clusters of similar factories are built. The kingdom’s decision to focus on five sectors, including automotive and consumer goods, sits well with its competitive advantage in cheap feedstock.

All these programmes have enjoyed some success in diversifying the kingdom’s wealth, but the need for so many different authorities suggests a piecemeal policy that has been drawn up in reaction to periods of falling oil prices. When prices spike, the easy money made from oil exports pushes other projects out of the limelight.

Index of all stories in this special report

• Saudi service industries come to the fore

• Jubail and Yanbu: Taking advantage of the downturn

• Interview: Ali al-Ayer, SIDF

• State funds increase their influence during the downturn

• Saudi clusters: Building an industrial base

• Modon: The driving force for diversification

• Comment: Saudi services sector needs funding